Is the price of real estate and land continuously increasing due to speculation?

The increase in prices in the real estate market is attributed to supply and demand factors

Deputy Minister Nguyen Duc Chi said that, as a capital channel, the capital market is an important channel for real estate businesses to mobilize medium and long-term capital, in line with the investment nature of projects. real estate. Along with the development of the economy, the capital market and the real estate market have a close relationship with each other and complement each other’s development. Risks of this market may affect the sustainable development of the other market. Therefore, it is necessary to evaluate and recognize the development of both markets in order to have appropriate development solutions and minimize possible risks.

The size of the capital market grows at an average of 28.5%/year in the period 2016-2021. By the end of the first quarter of 2022, the size of the capital market will reach 134,570 GDP in 2021, 3.5 times the size of 2015.

Since the beginning of April 2022, the market has had many adjustments, in which stocks of real estate companies have adjusted the most; The issuance of corporate bonds by real estate enterprises has grown rapidly in size but also created many risks and inadequacies. This issue needs to be looked at and assessed more deeply in order to have a solution to develop the market sustainably in the coming time.

According to a report of the Ministry of Construction, in 2021, the whole country has 282,105 successful real estate transactions. In which, the number of transactions of apartments and individual houses was 111,640 transactions, down 3.3% compared to 2020. Although the economy was affected by the pandemic, the prices of real estate, houses and land the foundation continuously increased from the beginning of 2021, by the end of 2021, apartment prices have increased by 5-7% on average; the price of individual houses in the project increased by 15-20%; the price of land plots increased by 20-30% compared to the end of 2020. In the first quarter of 2022, the number of transactions of apartments and separate houses had 20,325 successful transactions, only about 45.5% compared to the previous quarter. fourth quarter of 2021 and equal to about 80% of the same period in 2021.

“The increase in prices in the real estate market is attributed to supply and demand factors, the supply of the market has not met the needs of the people, leading to an increase in house prices (the people’s demand for housing increases in the context of increasing demand for housing). Rapid urbanization is a general trend of development.) But there is also an opinion that the increase in house prices is due to speculation and hoarding by a part of investors”, Deputy Minister Chi said and said, Despite the rapid growth, the capital market and real estate market still exist, limitations need to be analyzed and clarified to overcome in the coming time.

The capital market grows fast but has many potential risks

As for the capital market, it can be seen that the market has not developed deeply and is easily affected by psychological factors and the influence of the international financial and money markets. As for the real estate market, the most recent issue of land clearance and the land auction case in Thu Thiem Urban Area in Ho Chi Minh City has shown certain limitations in terms of land use planning, determination land prices, taxes, credits, collection of land use fees, compensation, site clearance, resettlement, administrative procedures on land as well as legal regulations on real estate business.

Over the past time, through bank credit and capital market, real estate businesses have mobilized a large amount of capital, effectively and efficiently supporting production, business and development projects. judgment. The mobilization of capital by real estate enterprises through the issuance of corporate bonds also has potential risks due to the lack of information and transparency in the issuance of high-interest bonds, which may affect the financial position of the real estate enterprises. Real estate businesses, the consequences of low capital use and an unfavorable real estate market also make it difficult for the cash flow to pay corporate bonds due…

Deputy Minister Chi emphasized that it is necessary to have solutions to develop a healthy capital market and real estate market, from perfecting the legal framework (Security Law, Enterprise Law, Construction Law, Land Law). , Law on Housing, Law on Real Estate Business and guiding documents…) to deploy solutions for operating, managing and monitoring the market.

At the seminar, Vice Chairman of the HCMC People’s Committee Phan Thi Thang said that in recent years, while government bonds have low interest rates, investors tend to switch to holding debts of The company’s capital is priced competitively, both in the form of securities and loans. Derivatives market has a limited number of derivative products, with only two derivative products based on the underlying asset. is a VN30 stock index and a 5-year government bond, and has only been born for more than 3 years, but has a fairly fast growth rate of two to three digits per year.

Ms. Thang said that the scale of the stock market and the bond market has not developed commensurate with the credit market, has not become an effective transmission channel for investment capital and creates high liquidity for investors. securities. The financial system of Vietnam in general and Ho Chi Minh City in particular is moving towards the development of the bank credit market rather than the capital market. This puts pressure on the credit granting activities of the banking system.

The capital market currently lacks financial services to raise capital associated with high risk tolerance such as venture capital, green bonds, cross-listing activities… “This is an extremely important factor. The more sophisticated and developed the financial system is, the greater the share of venture capital for innovative activities,” emphasized Ms. Thang.

According to Ms. Thang, given the current characteristics and current state of the capital market, the orientation needs to continue to promote the development towards an industrial cluster to exploit the synergistic and reciprocal effects of financial services. existing, emerging and absent in the market and other supporting services.

At the same time, encourage policies to attract influential financial institutions and institutions, and lead international capital flows into the Vietnamese market; investors with strong financial potential, investors in the fields of innovation, artificial intelligence, research and development R&D, financial technology – findtech, big data…